NEW YORK, Jul 25, 2002 /PRNewswire-FirstCall via COMTEX/ -- iStar Financial
Inc. (NYSE: SFI) reported that adjusted earnings for the quarter ended June 30,
2002 were $0.76 per diluted share, exceeding the Company's previously- published
guidance of $0.74, in each case excluding a $6.1 million non-cash charge related
to performance-based vesting of restricted shares granted under its long-term
incentive plan. The Company previously announced the charge in its April 2002
press release for first quarter 2002 earnings. For the quarter ended June 30,
2001, adjusted earnings were $0.72 per diluted share.

Adjusted earnings for the second quarter 2002 were $69.8 million on a diluted
basis excluding the non-cash charge, up from $63.5 million for second quarter
2001. Adjusted earnings after the non-cash charge were $63.7 million, or $0.69
per diluted share, exceeding the Company's previously-published guidance of
$0.67. Adjusted earnings represents net income computed in accordance with GAAP,
before gain on sale of corporate tenant lease assets, extraordinary items and
cumulative effect of change in accounting principle, plus depreciation and
amortization, less preferred stock dividends.

Net income allocable to common shareholders for the quarter was $33.3 million,
or $0.36 per diluted share, compared with $49.7 million, or $0.56 per diluted
share, in the second quarter 2001. Please see the financial tables which follow
the text of this press release for a detailed reconciliation of adjusted
earnings to GAAP net income.

In the second quarter of 2002, iStar Financial achieved a return on average book
assets of 6.4% and a return on average common book equity of 18.6% prior to the
non-cash charge, while leverage increased to 1.7x book equity. Returns on
average book assets and equity were 5.9% and 17.0%, respectively, after the
charge.

Net investment income for the quarter ended June 30, 2002 increased to a record
$76.1 million, from $68.4 million for the second quarter of 2001. Net investment
income represents interest and operating lease revenue less interest expense and
operating costs for corporate tenant lease assets.

iStar Financial announced that during the second quarter, it closed eight new
financing commitments for a record total of $576.0 million, of which $545.9
million was funded during the quarter. In addition, the Company funded $102.3
million under six pre-existing commitments and received $64.5 million in
principal repayments. The Company's recent transactions continue to reflect its
core business strategy of originating structured financing transactions for
owners of high-quality commercial real estate assets and leading corporations
across the United States.

Jay Sugarman, iStar Financial's chairman and chief executive officer, stated,
"This quarter, we continued to capitalize on our leadership position in
value-added financing for high-end real estate borrowers and corporate
customers. During unsettled market conditions, we provide our customers with a
reliable, responsive and intelligent source of capital, and charge a premium for
that reliability and responsiveness."

Mr. Sugarman continued, "In this volatile capital markets environment, we are
pleased to have a straightforward business model that relies on adding value for
its customers in generating strong total returns for its shareholders, and not
on accounting gimmicks or excessive leverage. This visibility has allowed us to
generate consistent earnings growth while paying a substantial quarterly
dividend to our shareholders."

In the second quarter of 2002, iStar Financial generated a record $576.0 million
in new financing commitments in eight separate transactions. The Company also
funded an additional $102.3 million under six pre-existing financing commitments
and received $64.5 million in loan repayments.

Mr. Sugarman commented, "By compensating our people with equity and thinking
like owners, we have always emphasized a disciplined approach to committing
capital. In the more heated market conditions between January 2000 and September
2001, we restricted net asset growth to less than $400 million, despite lower
short-term earnings growth. We went into year-end 2001 with significant excess
liquidity, and are now using a portion of that capacity to capitalize on
significantly more favorable risk/return dynamics in our markets. Since October
2001, we have generated $1.1 billion in net asset growth, and are raising our
earnings guidance for the rest of the year accordingly." Of the Company's new
financing commitments in the second quarter, 93% were either first mortgages or
investment grade corporate tenant lease transactions.

During the quarter, the weighted average first dollar and last dollar
loan-to-value ratio on new loan commitments and follow-on fundings was 6.8% and
67.4%, respectively. This ratio represents the average beginning and ending
points for the Company's lending exposure in the aggregate capitalization of the
underlying properties or companies it finances. In its corporate leasing
business, the Company's new investments this quarter include two transactions
with a weighted average lease term of 15.2 years.

Capital Markets

On May 28, 2002, the Company completed a private offering of asset-backed bonds
under its proprietary match-funding program, iStar Asset Receivables ("STARs").
The STARs Series 2002-1 offered bonds consist of 11 classes of investment-grade
securities, and the Company received approximately $885 million of gross
proceeds from the offering. The STARs Series 2002-1 bonds create match funded
term financing for approximately $1.1 billion of the Company's structured
finance and corporate tenant lease assets. STARs transactions are accounted for
as on-balance sheet financings, with the underlying assets remaining on the
Company's books, the issued bonds recorded as debt, and no "gain on sale"
recorded as revenue.

The weighted average interest rate on the offered bonds, expressed on an
all-floating rate basis, is approximately LIBOR + 56 basis points. The Company
used the offering proceeds to redeem the STARs Series 2000-1 bonds and to repay
amounts outstanding under its secured credit facilities. Spencer B. Haber, iStar
Financial's president and chief financial officer stated, "With the highly
successfully completion of another financing under the STARs program, we have
again strengthened our financial position by creating significant excess
liquidity and capacity under our credit facilities, while maintaining our match
funding discipline. In addition, with 109 bondholders participating in our
latest STARs offering, we continue to broaden and diversify our capital
resources without relying on the commercial paper market."

At June 30, 2002, the Company had $1.2 billion outstanding under $2.2 billion of
total credit facilities. In connection with redemption of the STARs Series
2000-1 bonds, the Company recognized an extraordinary loss on early
extinguishment of debt of $12.2 million, representing unamortized deferred
financing costs and prepayment penalties on the Series 2000-1 transaction.

Consistent with the Securities and Exchange Commission's Regulation FD, iStar
Financial comments on earnings expectations within the context of its regular
earnings press releases. The Company is raising earnings guidance for both the
third quarter and fiscal year 2002. iStar Financial currently expects diluted
adjusted EPS for the third quarter of $0.77-$0.78, up from prior guidance of
$0.76. The Company also expects diluted adjusted EPS for fiscal year 2002 of
$3.02-$3.04, up from $3.00-$3.02. These figures exclude the $0.16 per share
non-cash charge previously announced in April 2002 applicable to the second
quarter ($0.065 per share) and third quarter ($0.097 per share) of this year.
The charge relates to the performance-based vesting of restricted shares granted
under the Company's long-term incentive plan and tied to overall shareholder
performance (as measured by the Company's total rate of return).

In conjunction with its increased earnings guidance, the Company has raised its
expectations for 2002 net asset growth from $700 million to $950 million. The
revised $950 million figure assumes $1.4 billion of gross originations and $450
million of loan repayments. Mr. Haber commented, "With interest rates again
declining over the past three months, we expect loan repayments to increase
somewhat in the latter half of the year. However, any such increase should be
more than offset by the strong origination pace we have already generated, and
by transactions in our pipeline." Of the upwardly-revised $950 million in net
asset growth the Company is forecasting for the entire year, it has already
funded $838 million in the first six months.

Mr. Haber continued, "This quarter's record origination levels continue to
reflect the more favorable financing climate we have described in our conference
calls since early this year. Those of you who have followed our Company for some
time know that we added very little net asset growth between mid-2000 and late
2001, reflecting our often-expressed concern that the markets were getting
somewhat overheated. We have seen those trends reverse over the past three
quarters, and have used some of the significant excess liquidity we raised last
year to take advantage of the more favorable environment. We continue to sit on
over $1 billion of liquidity available to fund net asset growth, but remain
conscious of our longstanding policy of limiting leverage to approximately 2x
book debt to equity."

Risk Management

At June 30, 2002, first mortgages, corporate tenant leases and corporate
financing transactions collectively comprised 85.0% of the Company's asset base.
The weighted average first and last dollar loan-to-value ratio for all
structured finance assets (senior and junior loans) was 27.3% and 68.3%,
respectively. The weighted average debt service coverage, based on 2002 budgeted
cash flow and current interest rates, was 2.1x at June 30, 2002.

At quarter end, the Company's corporate tenant lease assets were 97.0% leased
with a weighted average remaining lease term of 9.6 years. Corporate tenant
lease expirations for the remainder of 2002 and 2003 represent just 0.9% and
2.3% of annualized total revenue for second quarter 2002. At quarter end, 82.3%
of the Company's corporate lease customers were public companies (or
subsidiaries of public companies).

In addition, across all of the office properties collateralizing the Company's
lending assets, only 3% and 5% of the underlying leases expire in 2002 and 2003,
respectively. Timothy J. O'Connor, iStar Financial's chief operating officer,
stated, "We have always managed the business to be insulated from short-term
changes in underlying commercial real estate market conditions. As a finance
business, we want our performance for shareholders and creditors to be
independent of which way real estate rents or values are going in any given
period. We are very pleased with our current risk management profile, and
particularly our minimal exposure to short-term office market conditions in both
the lending and leasing businesses."

The Company establishes loss reserves based on a quarterly bottom-up review of
each of its assets, as well as using top-down guidance from industry-wide loss
data and market trends. On a quarterly basis, the Company conducts a
comprehensive credit review, resulting in an individual risk rating assigned to
each asset. Attendance at the quarterly review sessions is mandatory for each of
the Company's professional employees. These quarterly meetings are designed to
enable management to evaluate and proactively manage asset-specific credit
issues and identify credit trends on a portfolio-wide basis as an "early warning
system."

During the risk ratings review, each asset is assigned a risk rating from "one"
to "five," with a "one" indicating superior credit quality, a "two" signifying
better than average credit quality, "three" as an average rating, a "four"
indicating that management time and attention is required, and a "five" denoting
a problem asset. In addition to the ratings system, the Company maintains a
"watch list" of assets which require highly proactive asset management to
preserve their current ratings.

Based upon the Company's second quarter 2002 review, the weighted average risk
rating of the Company's structured finance assets improved to 2.74 from last
quarter's rating of 2.77. The weighted average risk rating for corporate tenant
lease assets at the end of the second quarter remained essentially unchanged at
2.76 from the prior quarter's rating of 2.78.

For the second quarter, the Company removed two loans from its credit watch list
and added no loans or corporate tenant lease assets to the list. The Company now
has one loan and two corporate tenant lease assets on the list, with a combined
book value of $134.2 million as of June 30, 2002, down from $140.8 million at
March 31, 2002. The Company is currently comfortable that it has adequate
collateral to support the book value for each of the watch list assets.

At quarter end, accumulated loan loss reserves, cash deposits on corporate
tenant leases, and corporate tenant lease depreciation represented approximately
2.92% of the gross book value of the Company's investments (loans and operating
leases). As of June 30, 2002, the Company continued to have just two assets on
non-accrual status with an aggregate gross book value of $5.6 million, or 0.11%
of the gross book value of the Company's investments, down from $5.9 million at
March 31, 2002. Each of the Company's two non-accrual assets, as well as the
three assets on its watch list, continues to pay as agreed.

In addition to these reserves, the Company has asset-specific cash reserves,
deposits and letters of credit totaling $165.2 million (5.65% of gross book
value) for its loans and $83.8 million (3.72% of gross book value) for its
corporate tenant leases. The Company typically requires these reserves and
letters of credit to be funded and/or posted at the closing of a transaction in
accounts in which the Company has a security interest. These reserve figures do
not include additional reserves posted by borrowers for tax and insurance
payments on properties collateralizing the Company's loans.

Mr. O'Connor added, "Eighteen months into a slowing economy and softening
commercial real estate environment, we remain very comfortable with overall
asset quality and visibility going forward. None of our watch list assets,
including our two non-accrual assets, has missed a payment and we expect a full
recovery of principal in each case. However, despite our track record of no
missed loan payments, our sizable reserves help to protect our position in the
event an unforeseen credit issue should develop."

Other Developments

On July 1, 2002, iStar Financial declared a regular quarterly cash dividend of
$0.63 per common share for the quarter ended June 30, 2002. The second quarter
2002 dividend, which is payable on July 29, 2002 to holders of record as of July
15, 2002, represents approximately 79.7% of basic adjusted earnings per share
for the second quarter, excluding the non-cash incentive compensation charge.

iStar Financial is the largest publicly-traded finance company focused
exclusively on the commercial real estate industry. The Company provides
structured financing to private and corporate owners of real estate nationwide,
including senior and junior mortgage debt, corporate mezzanine and subordinated
capital, and corporate net lease financing. The Company, which is taxed as a
real estate investment trust, seeks to deliver superior risk-adjusted returns on
equity to shareholders by providing innovative and value-added financing
solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 11:00 a.m. EDT
today, July 25, 2002. This conference call will be broadcast live over the
Internet and can be accessed by all interested parties through iStar Financial's
Web site, http://www.istarfinancial.com, under the "investor relations" section.
To listen to the live call, please go to the Web site's "investor relations"
section at least 15 minutes prior to the start of the call to register, download
and install any necessary audio software. For those who are not available to
listen to the live broadcast, a replay will be available shortly after the call
on the iStar Financial Web site.

(Note: Statements in this press release which are not historical fact may be
deemed forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Although iStar Financial Inc. believes the expectations reflected in any
forward-looking statements are based on reasonable assumptions, the Company can
give no assurance that its expectations will be attained. Factors that could
cause actual results to differ materially from iStar Financial Inc.'s
expectations include completion of pending investments, continued ability to
originate new investments, the availability and cost of capital for future
investments, competition within the finance and real estate industries, economic
conditions, and other risks detailed from time to time in iStar Financial Inc.'s
SEC reports.) Financial Tables to Follow